Proximity to the technological frontier as a factor of firms’ competitiveness in Russia

Abstract

Goal: to identify and analyze the factors of Russian firms’ proximity to the technological frontier; the specifics of innovation activity of firms at different distances to the technological frontier; the relationship between the proximity of firms to the technological frontier and their competitiveness. Methodology: econometric analysis of data from a survey of over 700 firms in Russian non-energy industries conducted in 2019. Findings: the technological leadership of Russian firms is positively related to their size, market power, implementation of innovations, primarily process ones, as well as R&D funding, including those performed by external contractors. Borrowing of advanced technologies is characteristic of both lagging companies and leaders. However, the latter are more open to external knowledge and active in searching for advanced solutions and practices, primarily abroad. Foreign direct investment contributes to catching-up technological development rather than to gaining leadership. A positive relationship between the proximity of firms to the technological frontier and their competitiveness is revealed: technology leaders, other things being equal, are characterized by higher labor productivity and export activity. In addition, leading firms were more likely than others to increase their productivity, output, market share and exports. Originality and contribution of the authors: while much attention is paid in the modern economic literature to the competitiveness of firms and their distance to the technological frontier, these issues are rarely considered in relation to each other. The study partially fills this gap. The authors apply an innovative approach to determining the proximity of firms to the technological frontier, based on a combination of the level of technologies used and the novelty of products (services) produced. Characteristic features of Russian firms at different distances from the technological frontier and peculiarities of their innovative behavior are revealed. It is shown that along with the introduction of advanced technologies Russian firms have other ways to ensure their competitiveness.